The withdrawal of interconnect usage charge (IUC) this year has dragged down average revenue per user (ARPU) of telecom companies, despite them reporting strong user addition in the January-March quarter, India Ratings and Research said.
As per the Telecom Regulatory Authority of India data, India’s wireless subscriber base grew by 8.3 million to total 1,168 million users in the month of February which is the highest addition in the last one and a half year, the ratings firm said in a note.
Infact,
, which was consistently losing subscribers, reported growth in subscribers for the first time in February 2021 since October 2019.
Reliance Jio Infocomm Limited added net 4.3 million subscribers, followed by ’s 3.7 million and Vodafone Idea’s 0.70 million.
“The sliding voice tariffs, growing data tariffs, increasing data usage per subscriber, increasing data subscribers in the overall subscriber base and reducing tariff differentials among the telcos, over the last one year, indicate that the industry is moving towards a higher average revenue per user (ARPU) regime,” it said.
However, ARPU of the telcos reduced in 4QFY21, primarily due to a reduction of interconnect usage charges (IUC) charges to INR0.0 per minute w.e.f 1 January 2021 from INR0.06 per minute.
Airtel’s ARPU declined from Rs 166 in the previous quarter to Rs 145 in Q4 while Jio reported a dip from Rs 151 to Rs 138.
The agency believes that movement in the ARPU needs to be monitored over the next two to three quarters.
Regarding the 5G spectrum auctions said “there are still many variables and unknowns that need to be addressed for the successful implementation of the 5G technology in India, such as reserve price for 5G auctions, incremental users and ARPU and capex to be incurred by telcos.”
“The Department of Telecom is already considering a cut in the base price of 5G airwaves and the 700MHz band in addition to a lesser upfront payment, as per some of the news reports, which is yet to be announced and remains a key monitorable for 5G auctions,” Ind-Ra said.
